Photo: AP
Photo: AP

Opinion | Is video streaming at an inflection point in India?

Indians do not want to pay for OTT content—25% of users prefer to watch ads and not pay

Three recent research reports by different organizations have painted a very glitzy picture of India’s video streaming potential. For starters, media agency Zenith predicts that by 2021 Indian consumers will spend 79 minutes per day on mobile internet, up from 54 minutes today. In 2013, people were spending only 9.4 minutes on mobile internet. Of course, time spent on TV is still much higher—144 minutes daily, up from 140 minutes in 2013. But as you can see, the growth rate of TV consumption is lower than mobile internet, which is riding on the back of higher penetration of mobiles in smaller towns, lower data pricesand availability of content in regional languages.

Another report from consulting firm PricewaterhouseCoopers (PwC) said that India’s video streaming service is set to grow at a compounded annual growth rate (CAGR) of 21.82% to reach 11,977 crore by 2023. It said over-the-top (OTT) video platforms will record the highest growth among all segments over the next four years. Right now, India is the tenth largest market for OTT in the world, which is inclined more towards advertising-led services rather than subscription-led platforms. Venture capitalist Mary Meeker’s report said more than half the world’s population is active on the internet, with India accounting for about 12% of total users. With this share, India ranked number two after China, which accounts for 21% of all internet users globally. Reliance Jio Infocomm Ltd’s cheap data plans and low-priced smartphones were reasons for growth in internet users in India.

Against the backdrop of such encouraging numbers, it is only natural for OTT video services to seek growth. “OTT is exploding," says Vishnu Mohta, co-founder of Bengali language entertainment video streaming platform Hoichoi. “Thanks to 4G, we’re in the midst of a tsunami. Our consumption has grown five-fold," he says without divulging the number of Hoichoi subscribers. He expects OTT to go deeper into smaller towns and capture audiences across age-groups. Hoichoi’s initial subscribers were between 18 and 25 years. That base is now expanding to include people above 45, as they learn to handle technology.

Sunil Lulla, group CEO, Balaji Telefilms, the parent of OTT platform ALTBalaji, calls the explosion in OTT a bull run. “There’s a rush to do as much as you can as it is a direct-to-consumer business with the possibility of big scale." India is at the cusp of change where people are looking for personalized content. “Hence there’s a rapid rise in mobile entertainment which is individual-oriented," he adds. On ALTBalaji, currently the watch time is 60 minutes per day on an average. The Hindi language, subscription-driven platform for original content is expected to break even in less than two year. “But we have to build scale. This industry has 30 years of life ahead not because of convenience alone, but also for content," says Lulla. But, is the industry really at an inflection point? “Not really. All that the reports show is that there is a steady growth in data penetration," says Jehil Thakkar, partner, Deloitte India. A lot rests on the assumption that India will go wide with fibre-to-home. Although work has been done in big cities, smaller cities will need to be networked for OTT to reach a tipping point. “Fibre-to-home must reach scale for revenue to kick in," he added.

Gaurav Gandhi, director and country general manager, Amazon Prime Video India, says that in five years there’ll be more homes/individuals with streaming video access versus those with cable/satellite TV. “While mobile will remain the leading streaming video access, living room devices will be contributing quite significantly to viewing volumes aided by fixed line broadband."

Though video consumption is set to rise, revenue will follow only when people start paying for their subscriptions. Currently, people prefer advertising-led free services, a fact confirmed by a report by Brightcove Inc., a leading provider of cloud services for video, and research partner YouGov. It says that most Indians do not want to pay for media and entertainment content—25% of OTT users want to pay nothing and watch ads, while consuming content. Another 25% is willing to pay a low fee with limited ads. While OTT advertising is growing, it’s not keeping pace with the cost of content.

Thakkar says that as long as India has free alternatives, the average consumer will adjust his content preferences. There needs to be some paring of the free alternatives before over-the-top video streaming platforms can be monetized.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.